Question 1

An increase in taxes shifts the aggregate demand curve to the left.

Accepted Answer

A) True 
 B)False

Question 2

When the price of a given product declines,the consumer's spendable income rises because it takes less income to purchase the same quantity.This is called the:

Accepted Answer

A)  net export effect. 
B)  income effect. 
C)  substitution effect. 
D)  interest effect. 
A)  net export effect. 
B)  income effect. 
C)  substitution effect. 
D)  interest effect.

Question 3

According to Keynes,what determines the level of employment and income?

Accepted Answer

A)  aggregate expenditures 
B)  aggregate savings 
C)  government spending 
D)  aggregate supply 
A)  aggregate expenditures 
B)  aggregate savings 
C)  government spending 
D)  aggregate supply

Question 4

In the short run,the aggregate supply curve is:

Accepted Answer

A)  horizontal. 
B)  negatively sloped. 
C)  positively sloped. 
D)  vertical. 
A)  horizontal. 
B)  negatively sloped. 
C)  positively sloped. 
D)  vertical.

Question 5

Which of the following factors will cause the aggregate demand curve to shift to the right?

Accepted Answer

A)  reduction in the aggregate price level 
B)  reduction in personal income taxes 
C)  increase in interest rates 
D)  drop in foreign income 
A)  reduction in the aggregate price level 
B)  reduction in personal income taxes 
C)  increase in interest rates 
D)  drop in foreign income

Question 6

The multiplier is calculated by using the formula 1 divided by the marginal propensity to save.

Accepted Answer

A) True 
 B)False

Question 7

Use the following to answer questions 
Figure: Determining SRAS Shifts  
-(Figure: Determining SRAS Shifts)If there is a decrease in input prices,the short-run aggregate supply curve will shift from SRAS0 to _____ and the price level will become _____.

Accepted Answer

A)  SRAS1;P0 
B)  SRAS1;P1 
C)  SRAS2;P1 
D)  SRAS2;P2 
A)  SRAS1;P0 
B)  SRAS1;P1 
C)  SRAS2;P1 
D)  SRAS2;P2

Question 8

Suppose when John's income increased from $10,000 to $15,000,his consumption increased from $3,000 to $4,500.What is the value of his marginal propensity to save?

Accepted Answer

A)  0.7 
B)  0.3 
C)  0.2 
D)  0.8 
A)  0.7 
B)  0.3 
C)  0.2 
D)  0.8

Question 9

If the pound sterling appreciates against the U.S.dollar,England buys ______ U.S.goods,causing the U.S.aggregate demand curve to shift to the ______.

Accepted Answer

A)  more;right 
B)  more;left 
C)  fewer;left 
D)  fewer;right 
A)  more;right 
B)  more;left 
C)  fewer;left 
D)  fewer;right

Question 10

Which of the following would NOT cause a shift in the aggregate demand curve?

Accepted Answer

A)  a change in consumption spending 
B)  a change in the price level 
C)  a change in investment 
D)  a change in net exports 
A)  a change in consumption spending 
B)  a change in the price level 
C)  a change in investment 
D)  a change in net exports

Question 11

(Figure: Understanding Aggregate Graphs 2)   This economy is at point a.This figure depicts an economy:

Accepted Answer

A)  in neither short-run nor long-run equilibrium. 
B)  in short-run equilibrium only. 
C)  in both short-run and long-run equilibrium 
D)  in long-run equilibrium only. 
A)  in neither short-run nor long-run equilibrium. 
B)  in short-run equilibrium only. 
C)  in both short-run and long-run equilibrium 
D)  in long-run equilibrium only.

Question 12

If Europe has a large increase in income,what will happen in the United States?

Accepted Answer

A)  The aggregate demand curve will shift to the right. 
B)  The aggregate demand curve will shift to the left. 
C)  The aggregate demand curve will not change. 
D)  The aggregate demand curve will shift to the left in the short run and then to the right in the long run. 
A)  The aggregate demand curve will shift to the right. 
B)  The aggregate demand curve will shift to the left. 
C)  The aggregate demand curve will not change. 
D)  The aggregate demand curve will shift to the left in the short run and then to the right in the long run.

Question 13

At high domestic price levels compared to other countries,Americans:

Accepted Answer

A)  sell more exports. 
B)  buy more imported goods. 
C)  buy the same amount of foreign goods. 
D)  try to buy American. 
A)  sell more exports. 
B)  buy more imported goods. 
C)  buy the same amount of foreign goods. 
D)  try to buy American.

Question 14

If the marginal propensity to consume is 0.5,then $50 of every additional $100 of income will be spent.

Accepted Answer

A) True 
 B)False

Question 15

If an economy is in long-run equilibrium,it is also in short-run equilibrium.

Accepted Answer

A) True 
 B)False

Question 16

Increased productivity leads to increased aggregate supply.

Accepted Answer

A) True 
 B)False

Question 17

Define the spending multiplier and describe why it is important.Provide an example and formulas to describe how to calculate the multiplier at a stable price level.

Accepted Answer

These formulas may be used to

Question 18

The aggregate supply curve shows that the price level and real GDP are indirectly related.

Accepted Answer

A) True 
 B)False

Question 19

Output definitely increases if aggregate demand ______ and aggregate supply ______.

Accepted Answer

A)  increases;increases 
B)  rises;falls 
C)  falls;rises 
D)  decreases;decreases 
A)  increases;increases 
B)  rises;falls 
C)  falls;rises 
D)  decreases;decreases

Question 20

Cost-push inflation occurs when:

Accepted Answer

A)  total spending expands so much that equilibrium output exceeds full-employment output. 
B)  a supply shock shifts the short-run aggregate supply curve to the right. 
C)  rising resource costs reduce short-run aggregate supply. 
D)  subsidies to businesses are increased. 
A)  total spending expands so much that equilibrium output exceeds full-employment output. 
B)  a supply shock shifts the short-run aggregate supply curve to the right. 
C)  rising resource costs reduce short-run aggregate supply. 
D)  subsidies to businesses are increased.

An increase in taxes shifts the aggregate demand curve to the left.

When the price of a given product declines,the consumer's spendable income rises because it takes less income to purchase the same quantity.This is called the:

According to Keynes,what determines the level of employment and income?

In the short run,the aggregate supply curve is:

Which of the following factors will cause the aggregate demand curve to shift to the right?

The multiplier is calculated by using the formula 1 divided by the marginal propensity to save.

Use the following to answer questions Figure: Determining SRAS Shifts -(Figure: Determining SRAS Shifts)If there is a decrease in input prices,the short-run aggregate supply curve will shift from SRAS₀ to _ and the price level will become _.

Suppose when John's income increased from $10,000 to $15,000,his consumption increased from $3,000 to $4,500.What is the value of his marginal propensity to save?

If the pound sterling appreciates against the U.S.dollar,England buys U.S.goods,causing the U.S.aggregate demand curve to shift to the .

Which of the following would NOT cause a shift in the aggregate demand curve?

(Figure: Understanding Aggregate Graphs 2) This economy is at point a.This figure depicts an economy:

If Europe has a large increase in income,what will happen in the United States?

At high domestic price levels compared to other countries,Americans:

If the marginal propensity to consume is 0.5,then $50 of every additional $100 of income will be spent.

If an economy is in long-run equilibrium,it is also in short-run equilibrium.

Increased productivity leads to increased aggregate supply.

Define the spending multiplier and describe why it is important.Provide an example and formulas to describe how to calculate the multiplier at a stable price level.

The aggregate supply curve shows that the price level and real GDP are indirectly related.

Output definitely increases if aggregate demand and aggregate supply .

Cost-push inflation occurs when:

Exploring Economics

Production, Economic Growth, and Trade

Supply and Demand

Markets and Government

Introduction to Macroeconomics

Measuring Inflation and Unemployment

Economic Growth

Aggregate Expenditures

Fiscal Policy and Debt

Saving, Investment, and the Financial System

Money Creation and the Federal Reserve

Monetary Policy

Macroeconomic Policy: Challenges in a Global Economy

International Trade

Open Economy Macroeconomic

Filters

Exam 9: Aggregate Demand and Supply

An increase in taxes shifts the aggregate demand curve to the left.

When the price of a given product declines,the consumer's spendable income rises because it takes less income to purchase the same quantity.This is called the:

According to Keynes,what determines the level of employment and income?

In the short run,the aggregate supply curve is:

Which of the following factors will cause the aggregate demand curve to shift to the right?

The multiplier is calculated by using the formula 1 divided by the marginal propensity to save.

Use the following to answer questions Figure: Determining SRAS Shifts -(Figure: Determining SRAS Shifts)If there is a decrease in input prices,the short-run aggregate supply curve will shift from SRAS0 to _____ and the price level will become _____.

Suppose when John's income increased from $10,000 to $15,000,his consumption increased from $3,000 to $4,500.What is the value of his marginal propensity to save?

If the pound sterling appreciates against the U.S.dollar,England buys ______ U.S.goods,causing the U.S.aggregate demand curve to shift to the ______.

Which of the following would NOT cause a shift in the aggregate demand curve?

(Figure: Understanding Aggregate Graphs 2) This economy is at point a.This figure depicts an economy:

If Europe has a large increase in income,what will happen in the United States?

At high domestic price levels compared to other countries,Americans:

If the marginal propensity to consume is 0.5,then $50 of every additional $100 of income will be spent.

If an economy is in long-run equilibrium,it is also in short-run equilibrium.

Increased productivity leads to increased aggregate supply.

Define the spending multiplier and describe why it is important.Provide an example and formulas to describe how to calculate the multiplier at a stable price level.

The aggregate supply curve shows that the price level and real GDP are indirectly related.

Output definitely increases if aggregate demand ______ and aggregate supply ______.

Cost-push inflation occurs when:

Exploring Economics

Production, Economic Growth, and Trade

Supply and Demand

Markets and Government

Introduction to Macroeconomics

Measuring Inflation and Unemployment

Economic Growth

Aggregate Expenditures

Fiscal Policy and Debt

Saving, Investment, and the Financial System

Money Creation and the Federal Reserve

Monetary Policy

Macroeconomic Policy: Challenges in a Global Economy

International Trade

Open Economy Macroeconomic

Filters

Use the following to answer questions Figure: Determining SRAS Shifts -(Figure: Determining SRAS Shifts)If there is a decrease in input prices,the short-run aggregate supply curve will shift from SRAS₀ to _ and the price level will become _.

If the pound sterling appreciates against the U.S.dollar,England buys U.S.goods,causing the U.S.aggregate demand curve to shift to the .

Output definitely increases if aggregate demand and aggregate supply .